The Mutual Relationship between Financial Inclusion and Effectiveness of Monetary Policy: Evidence from Upper-Middle-Income Countries
Enhancing financial inclusion is considered a crucial factor in achieving global objectives such as ensuring sustainable growth, improving societal welfare, and reducing poverty. Due to its significance, financial inclusion has recently emerged as a key global policy issue and a frequently studied t...
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Ekonomi ve Finansal Araştırmalar Derneği
2025-06-01
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| Series: | Ekonomi, Politika & Finans Araştırmaları Dergisi |
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| Online Access: | https://dergipark.org.tr/tr/download/article-file/4619622 |
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| author | Mesut Doğan Tuba Özkan Anıl Lögün Hakan Yıldırım |
| author_facet | Mesut Doğan Tuba Özkan Anıl Lögün Hakan Yıldırım |
| author_sort | Mesut Doğan |
| collection | DOAJ |
| description | Enhancing financial inclusion is considered a crucial factor in achieving global objectives such as ensuring sustainable growth, improving societal welfare, and reducing poverty. Due to its significance, financial inclusion has recently emerged as a key global policy issue and a frequently studied topic in the literature. This study examines the mutual relationship between financial inclusion and monetary policy in upper-middle-income countries using the Two-Step System GMM and Panel Granger Causality methods. The findings derived from the analyses indicate an inverse relationship between inflation and financial inclusion. In other words, while inflation negatively affects financial inclusion, an increase in financial inclusion also exerts a negative impact on inflation. Regarding other variables, digitalization, regulatory quality, and money supply have a positive effect on financial inclusion. On the other hand, the growth of money supply and deposit interest rates positively influence the inflation rate. Furthermore, the results of the Granger causality analysis reveal a causal relationship from financial inclusion to inflation. In light of the findings, policymakers in upper-middle-income countries are advised to adopt a balanced monetary policy that enhances financial inclusion while keeping inflation under control, consider that excessively expansionary policies may intensify inflationary pressures and weaken financial inclusion, and take into account that increasing financial inclusion can help mitigate the adverse effects of inflation when formulating regulations. |
| format | Article |
| id | doaj-art-d455cb6ff1ce4160b1a9cb4a47e30a29 |
| institution | Matheson Library |
| issn | 2587-151X |
| language | English |
| publishDate | 2025-06-01 |
| publisher | Ekonomi ve Finansal Araştırmalar Derneği |
| record_format | Article |
| series | Ekonomi, Politika & Finans Araştırmaları Dergisi |
| spelling | doaj-art-d455cb6ff1ce4160b1a9cb4a47e30a292025-07-02T21:12:38ZengEkonomi ve Finansal Araştırmalar DerneğiEkonomi, Politika & Finans Araştırmaları Dergisi2587-151X2025-06-0110261963510.30784/epfad.1642086957The Mutual Relationship between Financial Inclusion and Effectiveness of Monetary Policy: Evidence from Upper-Middle-Income CountriesMesut Doğan0https://orcid.org/0000-0001-6879-1361Tuba Özkan1https://orcid.org/0000-0001-9510-2963Anıl Lögün2https://orcid.org/0000-0003-2543-3964Hakan Yıldırım3https://orcid.org/0000-0002-3173-0247BİLECİK ŞEYH EDEBALİ ÜNİVERSİTESİATATÜRK ÜNİVERSİTESİATATÜRK ÜNİVERSİTESİAmasya ÜniversitesiEnhancing financial inclusion is considered a crucial factor in achieving global objectives such as ensuring sustainable growth, improving societal welfare, and reducing poverty. Due to its significance, financial inclusion has recently emerged as a key global policy issue and a frequently studied topic in the literature. This study examines the mutual relationship between financial inclusion and monetary policy in upper-middle-income countries using the Two-Step System GMM and Panel Granger Causality methods. The findings derived from the analyses indicate an inverse relationship between inflation and financial inclusion. In other words, while inflation negatively affects financial inclusion, an increase in financial inclusion also exerts a negative impact on inflation. Regarding other variables, digitalization, regulatory quality, and money supply have a positive effect on financial inclusion. On the other hand, the growth of money supply and deposit interest rates positively influence the inflation rate. Furthermore, the results of the Granger causality analysis reveal a causal relationship from financial inclusion to inflation. In light of the findings, policymakers in upper-middle-income countries are advised to adopt a balanced monetary policy that enhances financial inclusion while keeping inflation under control, consider that excessively expansionary policies may intensify inflationary pressures and weaken financial inclusion, and take into account that increasing financial inclusion can help mitigate the adverse effects of inflation when formulating regulations.https://dergipark.org.tr/tr/download/article-file/4619622financial inclusionmonetary policydynamic panel data analysis.finansal kapsayıcılıkpara politikasıdinamik panel veri analizi. |
| spellingShingle | Mesut Doğan Tuba Özkan Anıl Lögün Hakan Yıldırım The Mutual Relationship between Financial Inclusion and Effectiveness of Monetary Policy: Evidence from Upper-Middle-Income Countries Ekonomi, Politika & Finans Araştırmaları Dergisi financial inclusion monetary policy dynamic panel data analysis. finansal kapsayıcılık para politikası dinamik panel veri analizi. |
| title | The Mutual Relationship between Financial Inclusion and Effectiveness of Monetary Policy: Evidence from Upper-Middle-Income Countries |
| title_full | The Mutual Relationship between Financial Inclusion and Effectiveness of Monetary Policy: Evidence from Upper-Middle-Income Countries |
| title_fullStr | The Mutual Relationship between Financial Inclusion and Effectiveness of Monetary Policy: Evidence from Upper-Middle-Income Countries |
| title_full_unstemmed | The Mutual Relationship between Financial Inclusion and Effectiveness of Monetary Policy: Evidence from Upper-Middle-Income Countries |
| title_short | The Mutual Relationship between Financial Inclusion and Effectiveness of Monetary Policy: Evidence from Upper-Middle-Income Countries |
| title_sort | mutual relationship between financial inclusion and effectiveness of monetary policy evidence from upper middle income countries |
| topic | financial inclusion monetary policy dynamic panel data analysis. finansal kapsayıcılık para politikası dinamik panel veri analizi. |
| url | https://dergipark.org.tr/tr/download/article-file/4619622 |
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